Here and There: Comparing Life in Different Cities

picture of train passengers in DC

David MkrtchianMatsui Washington Fellows

October 13, 2014

For this blog post, I would like to discuss the difference between D.C. and California in terms of transit, and the difference between Norfolk, Virginia and San Francisco in terms of urban planning.

One of the most underappreciated parts of Washington, D.C. is its transit convenience. Because Washington, D.C.’s Union Station is such a convenient transit hub, I was able to visit Norfolk, Virginia two weeks ago, to see a fellow Cal Bear studying medicine, and travel easily to New York City. As it happens, I am writing this blog while traveling on Amtrak’s high speed Acela train from Washington, D.C. to New York City.

Transportation Economics:

I am taking the Amtrak to New York to interview with a financial services firm. (Like other Berkeley students, I am recruiting for postgraduate jobs during the fall semester). Just to give a bit of context, the Acela travels from D.C. to NY in 3 hours. It’s become such a popular route that 1) many airlines have stopped serving this city-pair and 2) it’s a driver of Amtrak’s profitability in the only region that it is profitable: New England.

As Californians, it can be confusing why the high-speed rail initiative in our state is so controversial. As a student of economics, the question I ask myself is whether or not California’s proposed project is cost-effective. In short: probably not.

There are uniquely American features that make public infrastructure more expensive generally and California-specific reasons that public infrastructure is not a lucrative investment. To begin, it’s important to note that building public infrastructure in the United States is much more expensive than in Western Europe or Japan despite the lower unit cost of labor in the U.S. And the reason might be surprising. It’s much more expensive for the public to purchase private land in the U.S. than in other places. Whereas the legal doctrine of “eminent domain” requires the U.S. government to pay the market price for a given property, legal doctrine elsewhere only requires that governments pay “fair value” to purchase private property.

In addition to U.S. property law, the population density, existing highway infrastructure, and the geographic span envisioned by the high-speed rail  against its prospects of being cost-effective. New England is denser than California. This means that a given route can serve more salient destinations; by extension, more people will be interested in becoming customers. And Californians are already served by thousands of miles of highways (for which they have purchased cars).  In other words, connectivity can only increase if the price (and convenience) of transit via high-speed rail is lower than its closest substitutes— airplane and car. Given the distance between San Francisco and Los Angeles, the proposed endpoints of the line, it does not seem like a high-speed rail can deliver value.

Urban Economics:

One of the central difficulties of urban planning is dealing with the tradeoff between urban density and the cost-of-living. Comparing Norfolk, Virginia, and San  Francisco, California, is revealing of this difficulty. When I visited Norfolk I found that there was very little pedestrian foot traffic. My fellow companion remarked that the city seemed eerily like a ghost town, with large industrial buildings and wide city boulevards that seemed to hint at a recent human presence. This sensation, while unpleasant, is also a very large issue for city planners. Without foot traffic, it is hard to convince businesses (particularly restaurants and shops) to open. Foot traffic also drives cultural life and entertainment. Without it, a city languishes. However, Norfolk, to its credit, has a very low cost-of-living for a city.

On the other end of the spectrum we have San Francisco. San Francisco has managed to create pedestrian foot traffic such that businesses are interested in opening up, and such that there is a distinctive city culture that workers (and employers that would like to entice those worker) enjoy. San Francisco’s curse comes in terms of the cost-of-living.  Because it’s such a desirable place to be, the cost of living there is high.

Of course, since I am Berkeley student, I would prefer to tough it out in San Francisco than wonder what happened to all the people in Norfolk.

headshot of David Mkrtchian

My name is David Mkrtchian and I am a third year student double majoring in Economics and Legal Studies. I am extremely interested in pursuing an economic policy internship this coming fall. In particular, I am interested in the economics of financial regulation and economic development. This past summer, I interned for the Financial Industry Regulatory Authority. Since then, I have performed research for the Central Bank of Armenia on using political risk insurance as a developmental tool. Currently, I am performing research for Professor Robert Cooter of Boalt Law School on the impact of intellectual property law on economic growth. I look forward to interning in Washington, D.C. to apply what I have learned in the classroom and observe how policy is actually implemented. I am extremely grateful to the Matsui Center for supporting my internship and study with the UCDC Center.